The Effect of Audit Opinions on TOBIN’S Q and Stock Value by Panel Data Analysis

Abstract

Purpose – Financial statements of businesses contain information risk for various reasons. The most accepted way to reduce the information risk is the independent audit of the financial statements of the enterprises. It is thought that the independently audited financial statements will have a positive impact on the market value of the enterprises. The main purpose of the research under this assumption is to measure the impact of audit opinion on the market value of the companies that operated in the manufacturing sector and traded on Borsa Istanbul. Design/methodology/approach – For measuring the impact of audit opinion on the market value of the companies that operated in the manufacturing sector and traded on Borsa Istanbul between 1998 to 2019 Tobin's Q ratio and stock price are used to represent the market value. Panel data analysis is used in the research, because of data sets consisting of both cross-section and time series. Tobin's Q ratio and stock price are determined as the dependent variables, audit opinion is determined as the independent variable and the leverage ratio and asset size are determined as control variables in the research. Finding – It is examined within the scope of 1651 financial statements and audit reports of 110 companies. And it is examined Tobin's Q ratio values on 31 March, 30 June, 30 September, 31 December and at the time of the announcement of the audit report. Also it is examined the firm's stock price on the date of the audit firm's opinion, on the date of the one day before and after it. Discussion – As a result of the research, it has been revealed that audit opinions do not affect the Tobin’s Q ratio but affect stock price of companies in Turkey.